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INEQUALITY AND ECONOMIC MARGINALISATION
Employment intermediation for unskilled and
low-skilled work seekers – Part 1: Overview
NB Ideas
with Strategies for Change and Indego Consulting
October 2008
ABOUT THIS RESEARCH
The 2007 Annual Report of the Accelerated Shared Growth Initiative of South Africa
(AsgiSA) identified a need to focus on what was then called ‘the second economy’, and on
mechanisms to ensure shared growth reaches the margins of the economy. The Second
Economy Strategy Project was initiated in this context. It reported to the AsgiSA High
Level Task Team in the Presidency, but was located outside government in TIPS.
A review of the performance of government programmes targeting the second economy
was completed in early 2008. The project then commissioned research and engaged with
practitioners and policymakers inside and outside government. A strategic framework
and headline strategies arising from this process were approved by Cabinet in January
2009, and form part of the AsgiSA Annual Report tabled on 16 April 2009.
In South Africa, people with access to wealth experience the country as a developed
modern economy, while the poorest still struggle to access even the most basic services.
In this context of high inequality, the idea that South Africa has ‘two economies’ can
seem intuitively correct, and has informed approaches that assume there is a structural
disconnection between the two economies. The research and analysis conducted as part
of the Second Economy Strategy Project highlighted instead the extent to which this high
inequality is an outcome of common processes, with wealth and poverty in South Africa
connected and interdependent in a range of complex ways. The different emphasis in this
analysis leads to different strategic outcomes.
Instead of using the analytical prism of ‘two economies’, the strategy process placed the
emphasis on the role of structural inequality in the South African economy, focused on
three crucial legacies of history:
• The structure of the economy: its impacts on unemployment and local economic
development, including competition issues, small enterprise, the informal sector, value
chains and labour markets.
• Spatial inequality: the legacy of the 1913 Land Act, bantustans and apartheid cities, and
the impacts of recent policies, looking at rural development, skewed agriculture
patterns, and the scope for payment for environmental services to create rural
employment.
• Inequality in the development of human capital: including education and health.
TIPS’s work around inequality and economic marginalisation is built on the outcomes of
this strategy process.
The research undertaken under the auspices of the Second Economy Strategy Project
continues to be relevant today as government explores policy options to reduce
inequality and bring people out of the margins of the economy. This report forms part of
that research.
A list of the research completed is available at the end of this report. Copies are available
on the TIPS website: www.tips.org.za.
May 2012
TIPS is an
independent,
economic research
institution
active in South
Africa and the
region. The
organisation
facilitates policy
development
across six theme
areas: Trade,
African Economic
Integration,
Industrial
Development,
Inequality and
Economic
Marginalisation,
Sustainable
Growth
and Rural
Development.
Copies of
research from
the Inequality
and Economic
Marginalisation
theme area are
available on
the TIPS website
www.tips.org.za
For more
information
contact TIPS
+27 12 431 7900
CONTENTS
TABLES III
FIGURES III
BOXES III
INTRODUCTION 1
SCOPE OF THIS REVIEW 2
Defining employment intermediation 3
Definition 3
Categories of service 3
Target audiences’ varying needs 5
REVIEW OF INTERNATIONAL INSTITUTIONAL MODELS 6
Four institutional models 7
State-run public employment service 7
State agency 9
Partnership model 11
Outsourced model 14
Institutional lessons 15
REVIEW OF SOUTH AFRICAN INSTITUTIONAL ARRANGEMENTS 16
THE SERVICES 19
Six service categories 19
Database 19
Job brokering 20
Work experience facilitation 22
Training 23
Advice 25
Benefit administration 25
Monitoring and evaluation 26
DISCUSSION 27
Key issues 27
LESSONS 29
CONCLUDING REMARKS 31
BIBLIOGRAPHY 33
ANNEXURE 1: INTERVIEWS 37
TABLES
Table 1: List of employment intermediation services .............. 7
Table 2: Beneficiaries and their needs .................................... 9
FIGURES
Figure 1: Continuum of service ............................................. 25
BOXES
Box 1: Austria’s PES (AMS) .................................................... 4
Box 2: Jobcentre Plus ........................................................... 13
Box 3: Peru’s CIL ................................................................... 14
Box 4: Australia .................................................................... 15
Box 5: Work Wise................................................................. 20
Box 6: Training provision by public sector employment
services ................................................................................ 22
Box 7: Hungarian training programme .................................. 22
INTRODUCTION
Unemployment is one of the biggest challenges facing South Africa. Growth has been
inadequate, the skills level requirement of new jobs is continually rising, current skills among
the workforce are low and inadequate numbers of low end, unskilled jobs are being created.
Finding mechanisms to address this challenge is a key to South Africa’s economic success and
the social cohesion of communities. This task demands a combination of macro and
microeconomic strategies and falls outside the ambit of this project.
However, with over 500,000 unemployed people applying for placement in a job or for
assistance with unemployment insurance through the Department of Labour, and tens of
thousands more who are not eligible turning to private and non-governmental organisation
(NGO) operators to assist them find work, there is an important role for employment
intermediation services in South Africa. Most of those approaching the Department of
Labour and the private and NGO operators reviewed in this report are unskilled or semi-
skilled workers servicing the lower skills end of the labour market.
There is, in most countries, a mismatch between the demand for workers and the supply of
job seekers. The causes of this vary from country to country and include: limited information
and dissemination on job openings, mismatches between the skills of workers and the
demand of employers, the increased mobility of labour, changes in the nature of work, a
demand for more frequent upgrading of skills, poor job hunting skills by workers, labour
market discrimination, and barriers to access, such as geographic location and the high costs
of transport. This can contribute and exacerbate unemployment, as well as long term
unemployment of certain groups of people, and/or underemployment.
With limited growth and a contraction in jobs in many of the elementary sectors, traditional
policy makers in South Africa have focused their interventions on strategies that aim to
strengthen businesses and entrepreneurs. It was hoped that doing so would bridge the
divide between the first and second economy. Underlying weaknesses in this approach are
the assumptions that everyone has the capacity to be entrepreneurial and that there are
level playing fields in the market.
Employment intermediation efforts break from this mould and focus on linking the
unemployed into the formal job market primarily as workers but also as trainees and
business owners. It is one policy vehicle intended to improve the quality and efficiency of
the match of work seekers (supply) and jobs (demand). The employment intermediation
sector is a lucrative and competitive sector containing a diversity of operators. Historically,
the instrument has been used extensively within the professional, skilled stratum of work
seekers which is serviced largely by the private, for-profit agencies and by specific sectors,
such as the mining and construction sectors, at the bottom end of the skills spectrum.
Interestingly, the number of private operators at the bottom end of the market has
increased while the number of NGO and church providers has decreased. Despite this, the
market is not evenly serviced and large numbers of people do not have access to
intermediation services.
There are many benefits to employment intermediation. Firstly, the service provides
increased accessibility to market information to the marginalised, thereby broadening the
range of jobs opportunities for which they can apply. Secondly, it transforms nameless faces
into people, each with their own story, aspirations and skills offering. This profiling assists in
marketing the person and her skills in a similar manner as that offered by private
employment agencies within the upper ends of the job market. Doing that helps to match
work seekers with available opportunities. Thirdly, employment intermediation agencies
offer some security to employers who can contact the agency in the knowledge that they
have a track record of those work seekers; that increases the chance of a successful
placement. Similarly, employees have a lower chance of job rejection, owing to the matching
and job screening undertaken by the agency. Fourthly, employment intermediation also
offers opportunities to integrate better training and placement services. The employment
intermediator generally has a good knowledge of the labour demands in the market and of
the skills base of work seekers. This enables them to target training and subsequent
placement more effectively. Fifthly, employment intermediators assist in finding, and at
times creating, new opportunities with their proactive lobbying of employers to identify job
opportunities. Finally, some services, such as labour brokerage, provide additional services
such as transport or aftercare support and mentoring.
Employment intermediation works well in situation of economic growth or where
mismatches exist. In situations of economic decline or oversupply other strategies are
needed.
SCOPE OF THIS REVIEW
This project is funded by Trade and Industrial Policy Strategies (TIPS) and falls within a
broader review of second economy strategies. It seeks to understand:
• The employment intermediation sector globally and in South Africa;
• The extent to which employment intermediation services can meet the needs of low
skilled work seekers;
• The roles of different stakeholders in the service;
• The different models for providing such a service; and
• The potential benefits, constraints and lessons for different services and target markets.
The review is presented in three parts. Part one, this document, provides an overview of the
context, practices and lessons collated through a combination of a local and international
desktop study and various case studies that have been woven into the report.
Part two provides details of seven South African case studies, each detailing a specific
example of employment intermediation. The first three case studies focus on services
provided by the state, with two covering national government and one a local government
initiative. The next two case studies focus on the private sector and the final two on NGOs
offering employment intermediation services.
The two reports together form the basis for a set of recommendations on the possible role of
employment intermediation services in South Africa’s second economy strategy. That is
detailed in part three.
This particular report begins with some background, offered in section one, on the context
and employment intermediation services. The section outlines the scope of the assignment
and the outline of the report. Section three provides a definition of employment
intermediation and the range of services which could be offered. It is followed, in section
four, with a description of the different institutional options for providing the service.
Section five provides a brief overview of the South African context in respect of employment
intermediation services. Section six reviews the experiences in the different service
categories and concludes with key issues in each. Section seven discusses some of the key
issues and lessons that emerge from global experience and the various case studies. The
report concludes in section eight with a way forward.
The project hoped to comment on the extent to which employment intermediation services
help to match supply and demand that lead to better outcomes, speed up the job search
process, either extend or target access and to identify the less tangible benefits offered. It
also hoped to provide some comment on the relative value of the service for people with
different levels of skill and experience. Finally, we hoped to comment on what scale works
best for such a service.
Sadly, the data collected by most organisations were inadequate to answer all the questions
conclusively. Instead, anecdotal evidence had to be used to draw conclusions. It does appear
that where the employment intermediation service works with both work seekers and
employers, there is improved matching and shorter processes. What is less clear is the
relative impact of the service for people with different skills and experience, and the extent
to which the service increases the number of new work opportunities. The two NGOs
definitely have some evidence of new work opportunities provided, but, for most, it is just an
improved matching and placing service.
Defining employment intermediation
Definition
Employment intermediation refers to the act of mediating between seekers and providers of
employment. It applies to services that enable workers to be hired directly, not indirectly,
into firms.
It is important to differentiate employment intermediation services from those of
outsourcing or labour brokers where firms contract a broker to employ the workers they
need, thus, avoiding many labour regulations and benefits that apply to permanent workers.
This is a growing trend in South Africa with negative implications for the legal rights of
workers. The state has responded with talk of regulating the sector. In response, some
brokers have, in some cases, shifted their role to one of intermediation and now simply
source and transport workers, leaving the employment relationship up to the employer. This
alerted us to the need to undertake the final case study, which is the review of a segment of
the labour broker market, conducted towards the end of the project.
There are many different categories of intermediation services. Each includes a range of
possible interventions which have specific targeted clients and related activities.
Categories of service
In this review, six categories of service were identified: job brokering, work experience
facilitation, training, advice, benefit administration, and monitoring and evaluation. The
table below provides an overview of the different categories of services.
Table 1: List of employment intermediation services
Category Service Target Activities
Database
Database of
work seekers
Work seekers
Employers
� Develop database of work seekers
� Develop profile of each person for
inclusion on the database
� Advertise the database
Job database Work seekers � Register job vacancies and compile a
database
� Advertise vacancies
� Job search assistance access points
Category Service Target Activities
Job brokering
Job
brokerage
Employers
Job seekers
� Assistance with preparing CVs and
applications
� Advertising, marketing and networking
to develop database of employers
requiring placement services
� Assessment interviews
� Matching work seekers with vacancies
and/or recruitment for targeted
positions
� Candidate screening for jobs
� Reference checks
� Skills testing or referral to skills testing
� Interview training
� Job counselling before placement
Work
experience
facilitation
Work
experience
services
Work seekers � Identify work placements that provide
work seekers with work place experience
(on a voluntary, stipend or paid basis)
� Advocate for the creation of work
placements
� Provide readiness training and employer
support for work placements
Administering
labour
market or
employment
programmes
Work seekers and
the state
� Administer employment or labour
marketing programmes on behalf of the
state
� Policy input into programmes
� Referral of work seekers to programmes
Training Work seekers � Identify work seekers training needs
� Database of training requests collected
to inform providers of needs
� Referral to training providers
� Database of training providers
� Assessment of training potential
� Development of acquisition of training
courses to be provided in-house (soft
and hard skills)
� Learnership programme recruitment and
administration
Training Business start
up referral
Potential
entrepreneurs
� Coaching self employment SWOT
� Referral to business advice services
� Provision of business advice services
Labour advice
office
Employers and
employees
� Labour relations information
� Pro-forma contract guidelines
� Wage rate guidelines
� Assistance with registration for
unemployment insurance, etc.
Category Service Target Activities
5. Advice � Advice on the labour law
� Referral to legal services
� Distribution of CCMA forms
6. Benefit
administration
Employee
benefit
services
Employers and
employees
� Administration of employee benefit
schemes (e.g. unemployment insurance)
7. Monitoring
and evaluation
Monitoring
and
evaluation
Employers,
government,
affected
communities
� Track data on the service for example
number of job seekers and placements
and scale of income leveraged into the
community
� Track employer satisfaction
� Track employees (e.g. duration of
employment, time taken to find next job,
impact on household) and satisfaction
with the service
� Collection and analysis of data on
employment trends
Source: Adapted from Mazza (2003)
These categories of service are discussed in more detail later in this report.
Target audiences’ varying needs
There are many possible targeted beneficiaries and clients for employment intermediation
interventions. Generally, the private sector targets the high end of the market, leaving the
lower skills end to the public sector or the NGOs. However, in South Africa, there are
interesting examples of the private sector stepping in to source labour and mediate between
work seekers and employers. The establishment of TEBA and the burgeoning labour broker
market are examples of private sector interventions.
Five categories of beneficiaries exist, each with different needs, as is outlined in Table 2, and
it is this market that this project focuses on.
Table 2: Beneficiaries and their needs
Type of client Services needed
Never worked – unskilled Job brokering
Job placement counselling
Work related life skills
Work experience facilitation
Training
Long term unemployed – unskilled Job brokering
Job readiness and placement counselling
Work experience facilitation
Work related life skills
Training
Recent job loss Job brokering
Medium term risk of job loss Skills assessment
Training plan
Recent school/college leavers Job brokering
Work experience facilitation
Job placement counselling
REVIEW OF INTERNATIONAL INSTITUTIONAL MODELS
Four institutional models
The challenge with employment intermediation is how to cluster and manage the provision
of the different components of the service in ways that maximise efficiency and impact. In
this section, we have reviewed international experience of public sector employment
services and their partnerships with non-government providers.
Four different institutional models emerge, ranging from a monopoly run directly by a
government department through to dedicated public sector agencies, partnerships and
outsourced services. These are discussed in detail in this section of the report.
State-run public employment service
Historically, in industrialised countries, the state has held the monopoly on providing
employment intermediation services, particularly at the lower end of the market where the
service does not pay for itself.
In developing countries, there is also a dominance of the public sector generally
administered by the national Department of Labour. Because of limited resources, the
service tends to be small and focused on the lower stratum of work seekers. Key challenges
with exclusively state-run systems have been local access and inefficiencies in terms of cost
and placement.
Ten to 20 years ago, almost every country’s service was modelled in this way, yet current
trends are towards some form of outsourcing or partnership arrangement.
State agency
In line with more generalised public sector reform strategies, employment intermediation
services have been restructured with a range of models emerging. For example, Austria and
England have set up public sector entities while Australia has outsourced supply in a
competitive bidding process. All these moves have been motivated by the same pressures: a
need to improve efficiencies, performance and reach.
The advantage of a state agency is that it ring-fences the service and budget, allows for
dedicated management, and offers a certain amount of flexibility and autonomy.
Box 1: Austria’s PES (AMS)
Background
Austria has a population of over 8.1 million people, and an estimated unemployment
rate of 4.7% (2006 figures). Like most European countries, employment intermediation
has been dominated by the state. In 1994, the Austrian public employment service (or
PES) was restructured and a public entity was established, called AMS, to provide the
service.
With the establishment of AMS, the service was expanded into a comprehensive
employment intermediation service, rather than a mere employment office.
Representatives of employers and labour organisations, along with government, are
involved in AMS. It is a modern service provider with a strong corporate image and is
technologically adept. Staff members are trained to be service-oriented and a
performance management system is in place.
Services
The national office focuses on policy and monitoring while the branch offices are
structured to be one-stop-shop centres. Services are organised into three zones in order
to increase efficiency and minimise the waiting time and number of visits job seekers
have to make to the AMS centres as outlined below.
Zone Information Characteristics
Information zone Career information centres (BIZ) Anonymous
Self-service
Services zone Placement
Claims and benefits
No appointment needed
Regular checks
Appointment control
Counselling zone Intensive guidance and
assistance
Contacts by appointment only
Arrangement of appointments
Job seekers
The AMS targets different types of job seekers, namely:
� Unemployed job seekers;
� Employed job seekers;
� Young people looking for apprenticeships; and
� School-leavers facing a career choice.
Job seekers can access a host of services, either online or face-to-face.
Online services and support tools include an eJob-Room for online job searches, a
Career Information System, which has an up-to-date list of professions, including the
necessary qualifications listed on the website, and a Job Application Coach providing
advice on how to write job applications.
Office based services available at branch offices include:
� Touch screen computers;
� Self-service system, offering vacancies and other information;
� Guidelines on how to prepare for job interviews;
� Career information centres that provide detailed information on various
professions, employment opportunities, labour market information, training
and education. This information is available online, in brochure form and, in
some instances, via a video library. The centres also administer occupational
interest tests while personal computers are available to search for open
Source: Wagner-Pinter, et al (2007)
Partnership model
Rising unemployment, special needs of specific target groups, severe constraints on
government budgets and the opportunities to create new models have generated a market
for private service providers. This has given rise to another model that is used by some state
departments and public sector entities, namely, the partnership model. In this model, private
sector providers are drawn into the service either through networks or more formalised
agreements.
There are two broad categories of partnerships: networks, that do not involve the
expenditure of any funds in exchange for services, and direct partnerships, which involve
some level or formality and, generally, also the allocation of resources.
France operates a network approach where the public sector disseminates information to
private agencies and the two sectors exchange information pertaining to the local labour
market. Information sharing expands the pool of job seekers and vacancies increasing the
chances of a successful match, which is the aim of the service. There are many examples of
more formalised models. In the Netherlands, the state works in partnership with private
agencies and community organisations while in England, Jobcentre Plus, the state agency for
employment intermediation, has developed a range of innovative partnerships with the
private sector to improve employment prospects for work seekers. Both these examples
involve some form of resource allocation to facilitate the partnership. Networking and
relations with partners can be initiated in a range of institutional settings and do not require
massive restructuring of institutions.
apprenticeships and jobs in Austria and Europe;
� Information by telephone for job seekers;
� Information for groups; and
� Assistance plan, including identification of the goal and the necessary steps
to take.
Those services in highest demand are the registration of work seekers, support for job
searches and job coaching for special needs groups. In 2005, 96% of work seekers were
happy with the service.
Employers
The AMS also works with employers/enterprises to exchange information about labour
demand and supply, canvas and fill vacancies, prevent unemployment, arrange benefits
and provide qualification, training and support.
In filling vacancies, the AMS offers employers a host of service including eJob-Room
access, access to a Europe wide network (EURES), job fairs, identifying qualifications
and strategies to fill the respective vacancy, company visits with personal contact
between AMS staff and the enterprise at the business location, guidance on possible
subsidies, advisory services re planned dismissal of staff and functions related to the
employment of foreigners.
The service in highest demand is training of prospective employees linked to placement
services. It was found that 90% of users are happy with the service.
The AMS service placed 91% of its job seekers in 2005 and 82% of those receiving
training were placed and over three quarters of work seekers were placed within a six
month period.
Box 2: Jobcentre Plus
Jobcentre Plus is an executive agency of the Department for Work and Pension, created
in April 2002. Its role is to support people of working age from welfare into work, and
to help employers to fill their vacancies. It has over 1,500 offices and is one of the
largest employment intermediations services in Europe.
It aims to increase labour supply through job intermediation services, work towards
parity in accessing jobs, and ensure those eligible for benefits receive them while at the
same time fulfilling their responsibilities to look for new employment. The service is
available electronically or face-to-face and is one of the largest and most successful
employment intermediation services. This has been achieved through a range of
innovative partnerships, some national and others regional or local.
Jobcentre Plus services are accessible at 1,000 places, ranging from libraries to local
authority offices. On average, there are more than 40,000 vacancies on the Jobcentre
Plus website at any time. Each month, the Jobcentre Plus website receives four million
job search requests, making it the number one recruitment website in the United
Kingdom (UK). Each week, 17,000 people find a job through Jobcentre Plus. 25% are
internet-based placements. The remainder involves a placement officer and face-to-
face contact.
In an effort to improve work placement rates for the most vulnerable, Jobcentre Plus
has developed a partnership with the private sector, called Local Employment
Partnership, where employers pledge jobs for long term unemployed people and those
at a disadvantage in the jobs market. These include single parents, long term
unemployed job seekers, and people who have disabilities or health conditions.
Employers are asked to make a deal with government and to offer people opportunities
to get back into the work place and progress through, for example, interviews,
mentoring, on-the-job training or work trials. In return, Jobcentre Plus will ensure that
the employer is given the chance to recruit people they might not have considered, who
are eager to work with minimum hassle, risk and cost. In addition, they provide support
to help employers give them the job-related skills they need. By participating in the
programme, employers not only demonstrate to their local community that they have
faith in the local workforce, and that want to provide job opportunities for local people,
but are also given an opportunity to recruit a more diversified workforce.
One of the many firms who have signed up for the service is Pak Supermarket. It has
agreed to offer people 'Work Trials', so job seekers who may be unsure about whether
the job is suitable have an opportunity to try the job out before making a decision. At
the same time, the employer has a chance to interview people on the job and make up
its mind about whether to make a job offer. Other partners, like ENABLE, are proud to
be involved with Local Employment Partnerships, both as an organisation that supports
people with learning disabilities to get work, and as an employer. As the executive
director explains: “We are committed to the principle of employment as the best route
to better lives.” The experience is not just a positive one for the employer, it also
benefits job seekers as one work seeker commented: ”I’m really happy in my job, when
you are out of work for a while your comfort zone really shrinks and it can be daunting
to think about going back to work. The staff at ENABLE Scotland made me feel really
relaxed and they encouraged me to be honest about why I’ve not been working. I
suppose they must have thought I was the right person for the job, which has given me
a real confidence boost. It’s a great place to work.”
Between 2008 to 2010, Jobcentre Plus aims to help 250,000 jobless people into work
through its Local Employment Programme.
Source: www.jobcentreplus.gov.uk
For private providers, the reasons for cooperating include the recognition of their role and
the chance to expand their service. Where private providers have been brought in, the
primary benefits have been a reduction in the costs of the service and increased innovation
and diversity of delivery models. However, it is a more difficult environment to manage,
requiring a greater reliance on performance management measure and an open line of
communication.
In some countries, community organisations and NGOs have stepped in to address
community needs in employment intermediation in the face of inefficient or under-
capacitated public sector systems.
This is true, to some extent, of the South African situation where the Department of Labour
has been unable to address adequately the need, consequently, NGOs have stepped in to fill
the gap by providing interesting models of employment intermediation and opportunities for
partnerships. There are many different ways the state can respond to this. The example of
Peru offers an interesting networked model.
Box 3: Peru’s CIL
Peru has a population of nearly 30m, an unemployment rate of 7.2%, wide spread
underemployment, a growth rate of 8% and a small annual public employment
service budget. Peru does not have unemployment insurance.
Peru's public employment service has been plagued with problems common to a
number of developing countries: high costs, long registration waits, inflexibility and a
poor image. In 1996, the MTPS (Ministry of Employment and Social Development) set
out to improve the employment services by decentralising it and making it more
flexible.
The Ministry has been able to improve outputs significantly, increase placements, and
boost the participation of employers through the modernisation of the public service
and the development of the Peruvian Network of Centres of Intermediation and
Labour Information (CIL-ProEmpleo), a national network of public, private, and non-
profit providers. The network facilitates information sharing and capacity building in
order to reach more people on a wider geographic basis with a better quality service.
The Peruvian Network of Centres of Intermediation and Labour Information (CIL)
expanded in phases. Firstly, it incorporated training centres and institutions (including
technological institutions and occupational centres). Shortly thereafter, it expanded
to private agencies, other public institutions and non-governmental providers. This
expansion included institutions promoting local employment, such as municipalities
and churches and development organisations.
The system is more than a network of intermediation providers co-existing. It
includes mechanisms of joint promotion, regulation, and incentives to guarantee
quality standards. The centres, public and private, talk the same language and use the
same software and occupational classifications to assess workers’ skills and match
workers to vacancies. They provide job search assistance and occupational
orientation. In addition, labour market data on both demand and supply can be
jointly analysed from the centres and provided as feedback to local training
institutions.
The result of these innovations has been significantly to increase placements, job
seekers registered, and vacancies listed. From 1998-2000, the number of placements
of the combination of public and private centres increased 27.5% and efficiency in
terms of the percentage of job seekers placed and vacancies filled also increased.
By 2005, the network was placing 30% of work seekers, advising and assisting
another 28% by sourcing training or self-employment support, and, finally, filling over
60% of the vacancies successfully. While the public sector offices still register the
larger number of job seekers and jobs, the role of the network continues to increase
exponentially.
The system is now focused on the development of a more integrated information
system and extranet network operating via the Internet and the development of a
labour market observatory for analysis of labour market trends. The special purpose
of establishing an observatory is also to plan training systems and employment
services better and to provide the operators of job services with information to orient
the job seekers.
The implementation of the CIL-PROEmpleo network is an interesting public, private
and non private partnership. It could serve as a model for other developing countries
to assist with developing the capacity of public and private employment service
providers.
Source: ILO (2003(2)) and Mazza (2003)
Outsources model
A more radical approach involves restructuring the public service completely by opening up
the market and allowing the state to compete, alongside private agencies, in an outsourced
model.
One such example is a model in Australia where the state pays private agencies and
community organisations to place job seekers based on performance (World Bank, 2003). In
this model, the public sector remains responsible for the overall budgets, funding, policy
setting and evaluation. A feature of this approach is that it demands overall management
from a public institution that is somewhat independent of the entities competing for the
services (Barbier et al, 2003).
Box 4: Australia
Australia opens up the employment intermediation market
In the mid to late 1990s, Australia radically changed the way it delivered labour market
assistance, most notably by creating a competitive market for publicly funded
employment services, known as the Job Network. Over 300 private, community and
government organisations are part of the network and are paid a fee for placing clients,
with extra fees for placing the long term unemployed. The key motivation was greater
cost efficiency and more value for money. In addition, contracting out was seen as a
quick and effective way to transform entrenched, archaic and deficient management
and work practices and to allow to staff to specialise in clients’ needs.
Membership of the Job Network comprises private, for-profit as well as non-profit
employment agencies and the public employment service (PES) replacement –
Employment National. Members compete by tendering for the delivery of labour
market services. The payment of benefits and screening of job seekers is done by a
government operated agency called Centrelink.
Job Network is unique in that the PES competes on an equal basis with other private
service providers. A review conducted in 2003 by the Australian Productivity
Commission found that the advantages of the new system were that an outcome
orientation, competition and choice produced some of the benefits associated with
private markets for services. Advantages include focus, flexibility, innovation, lower
costs, performance driven entry and exit from the market and provides a choice for
consumers. There were also several challenges to applying a purchaser-provider model
to employment services, including dangers of inequity, focus on short-term outcomes at
the expense of the medium to long term goal, possible loss of economies of scale and
reduced co-operation. Despite these challenges, the review concluded that the
advantages outweighed the disadvantages. The costs of the service have been targeting
of funds, reduced costs, exit of poor providers and increased choice for work seekers.
Source: ILO (2003) and Webster et al (2001)
Institutional lessons
As the variety of intermediation models demonstrates, there is no blue print or right way to
deliver the service. In different situations, different institutional arrangements are possible
and desirable. What is also clear is that without some public sector intervention and support
services at the bottom end of the skills spectrum, and for the most vulnerable and
disadvantaged work seekers, there will be scant opportunity as the service costs money to
provide and the market only pays at the higher ends.
Success depends on the strength and performance of public sector and private institutions,
available financing, relationships between social actors, political legitimacy of providers and
the perceptions of targeted beneficiaries and available systems.
Regardless of the institutional arrangement adopted, what becomes clear from international
experience is the value of drawing in private and community actors, networking with such
services, and centralising certain functions such as a database of work seekers and job
opportunities and monitoring statistics.
REVIEW OF SOUTH AFRICAN INSTITUTIONAL ARRANGEMENTS
In South Africa, a partnership model has developed. Unlike many of the international
examples discussed in section four, the primary partnerships in South Africa are between
government departments and also between government and state agencies.
The primary department is the Department of Labour which is responsible for registering
workers, unemployment insurance, training of the unemployed and underemployed, and
regulation of the market. Case study one provides a more detailed case study of the
Department of Labour system. It is supported by:
• The Sector Education and Training Authorities that operate in terms of the National
Skills Development Act and which collect and disburse skills levies, develop skills plans,
register training providers to deliver this plan and promote and manage learnerships;
• The Department of Public Works that is responsible for the national expanded public
works programme which provides work place opportunities and training to the
unemployed, at rates below the market rates, in the course of delivering government
services;
• The Presidency which has initiated a range of programmes under the second economy
strategy review, such as the “Right to Work” programme;
• Umsobomvu Youth Fund whose mission is to facilitate the creation of jobs and skills
development for South Africa’s young people. Its services include a portal for young
people who are looking for information about employment, careers, education, training,
community development and health issues;
• The Department of Social Development which provides a range of social welfare
benefits to the poor and also funds programmes that reduce the number of people
living in poverty, including NGO intermediation services; and
• The Department of Trade and Industry which has various programmes to support self
employment and small businesses.
The Department of Labour is in the processes of implementing a major overhaul of its
systems and services through the new Employment Services System. This will enable work
seekers and employers to capture information online, provide a matching service and
information to non-government players. As part of the new system, it will become
mandatory for all employers to register vacancies with the Department of Labour.
In addition, the Department of Public Works has been reviewing its exit strategies and
identifying additional programmes to facilitate access of participants into the job market.
Details of some of these initiatives are captured in case study two. Most of these have a
strong skills training component.
Despite the breadth of services available, South Africa has not done well maximising the
matching of work seekers with available opportunities or of with increasing opportunities to
enhance employability. This gap has given rise to a range of other initiatives.
Still driven by the public sector, municipalities are stepping in to address the needs of locally
unemployed people. An interesting example of this is the Ekurhuleni Job Placement
Programme, a partnership between the local labour office, the municipality and Lewisham
municipality in England. It aims at improving employment prospects in the Benoni area. The
programme registers work seekers’ curriculum vitae on a database, registers employers’
employment opportunities, and provides life skills training, such as job hunting and interview
skills, brokers and matches jobs and work seekers to address the skills shortages and
vacancies of local employers. In addition, it has an employer engagement programme
designed to identify and address the factors restricting employment, and provides post–
employment support to both the new employees and employer, to ensure job retention. The
full details of this example are captured in case study three.
There has been a proliferation of private, for-profit agencies. These are regulated either
under the Skills Development Act which requires any person providing employment services
for gain be registered with the Department Labour. The Services SETA is responsible for skills
development in the labour recruitment and provision sector. They have 3,329 members
registered with them to date. The Services SETA Labour Recruitment Chamber focuses on
both Permanent Employment Agencies as well as the Temporary Employment Sector. The
industry has grown significantly over the past six years.
Falling outside of the definition of the current Act, labour brokers are regulated under the
Labour Relations Act which sets out the terms for employment if they are labour brokers.
Soon, both will be regulated under the amended Skills Development Act and labour brokers
will be required to register.
Classically, a labour broker is a business entity that provides other businesses with workers
who will perform work. The client pays the broker, who then pays the workers and, thus, is
also responsible for ensuring that all the legal requirements of employment are met. The
attraction of labour brokers to employers is reduced administrative and legal responsibilities
for labour, particularly short term labour, and efficiency because all of the labour needs are
met from a single source. Case study five provides a snapshot of parts of the industry. In this,
we have broadened the definition to include those services that involve a triangular set of
interdependent relationships between the ultimate employer and the broker, the ultimate
employer and the labourer, and between the broker and the labourer. In each business
transaction, these relationships may differ, as is explored below. We have included in our
definition any triangular set of relationship which results in the employment of largely
unskilled workers and in which the relevant parties would themselves describe the
transaction as involving a labour broker.
The role of labour brokers is marred by controversy. We do not attempt to unpack these
issues. Instead, we focus on those elements of the service which resonate with other
employment intermediation services and needs to extract the lessons there from. It in no
way attempts to be a comprehensive study. Instead, it aims to provide a quick review of the
different approaches in order to extract lessons for employment intermediation services.
Another private sector model is one adopted by the mines which set up TEBA Limited to
recruit and manage their labour provision. TEBA has since expanded its services to include a
range of other services to work seekers, employees and their families. Case study three
provides an overview of TEBA.
Not-for-profit organisations have also picked up on the gap in the market with social
entrepreneurs setting up not-for-profit agencies to provide employment intermediation
services for the unskilled. Two such organisations are Work Now, a geographically focused
service, and Men on the Side of the Road, a service focusing on a particular target group
within the unemployed. Work Now provides a focused job placement service for the bottom
end of the skills band, using its networks to encourage local employment and creation of
jobs, even if they are short term, and bridges into the world of work for the unemployed in
Hout Bay, Cape Town. Men on the Side of the Road works with work seekers who wait on
the side of the road by linking them to employers and by providing training opportunities. In
addition it supports business starts by giving ideas, training and access to tools. These two
models are detailed in case studies six and seven.
THE SERVICES
Six service categories
In this section, we discuss briefly the six service categories, using international and local
examples to demonstrate the range of possibilities that are available. Each sub-section
concludes with a summary of the critical issues to be considered when providing the cluster
of interventions within the service category.
Database
This service includes compiling databases of both work seekers and available jobs, and then
matching the work seekers and available opportunities. Databases and related online
recruitment services are a growing worldwide phenomenon within the employment
intermediation sector.
The electronic revolution has facilitated this and is fundamentally changing the way job
intermediation services are provided globally. In many developed countries this service has
moved away from the costly face to face interactions and is being replaced with self service
facilities, internet or computer based systems and kiosks. Job seekers and employers
increasingly contact each other through these self service systems without intervention of
placement officers. Countries such as Australia, Canada and the United States have moved
public employment services online by providing a self service job matching service through
the Internet. In Poland, a similar model is being followed with the introduction of self service
kiosks in labour offices. In Brazil, the concept is being rolled out using mobile vans (World
Bank, 2003)
In South Africa, there has been a significant growth in the number of online services.
Interestingly, most online recruitment services do not see themselves as employment
agencies. They argue that they do not engage in actual recruitment, assessment and
selection, but only provide the tools and channels for work seekers and employers to make
contact (HSRC, 2001). Also, few of these players service the bottom end of the skills
spectrum.
The use of information technology has worked well in countries where computer and
Internet usage is high. Yet, in countries where computer and Internet usage is not high, and
or where literacy levels are low, a more personalised service is still needed.
In South Africa, the experience with databases and the Internet has been poor within the
selected target group. Umsobomvu has created a jobs portal that lists jobs, work related
information, training courses, bursaries, learnerships and information on career counselling
and resources. While relatively large numbers of work seekers have registered on the
database (with 8,288 CVs being submitted), few have been referred on (2,518), still fewer
have been placed (91) (Second economy review, 2008). The Department of Labour‘s Western
Cape office has had a similar experience with a recorded placement rate of 3.7%.
The Community Employment Initiative, the predecessor to Work Now, registered some
8,000 people but then struggled to link them to employment opportunities at the bottom
end of the market because:
• People’s contact details frequently change making them un-contactable;
• Most employers are looking for some kind of screening from the service both to verify
the skills base and for security considerations; and
• Jobs are often not advertised at the bottom end of the market due to the high volumes
of applicants, and are rather filled through word of mouth.
This does not mean that there is no role for computerised, Internet-based databases.
Databases are very important in the execution of the job brokering service. However, as a
stand alone service, they have limited value at this end of the market.
TEBA has two existing computer based systems for registering work seekers and also for
capturing the tracking the details of employees. Both are used in the job brokering process
and there are plans to upgrade the system to offer an e-recruitment shop. Both NGOs
interviewed, namely, Work Now and Men on the Side of the Road (MSR), plan to set up
Internet-based databases of both work seekers’ CVs and available opportunities. These will
include the full history of the work seeker, reference checks and comments from other
employers. The Department of Labour is also planning a massive investment in a
computerised database. Given the experience to date, reliance on technology-based
solutions and databases must be cautioned. It is the personalised services that have the most
success both in identifying work opportunities and in matching work seekers with these.
Compilation of databases is not a simple task. The situation of work seekers changes
frequently, contact details change, people find work and new people lose jobs. The database
of work seekers needs to be active with frequent contact and updating. Employers’ job
needs also change rapidly. To be effective, the service needs a wide range of listings to meet
different categories of work seekers.
Job brokering
Closely linked to the database service is the job brokering service that facilitates the link
between work seekers and opportunities. Traditional job brokering involves listing and
advertising vacancies and matching these with work seekers’ profiles. The service must
incorporate the following: a list of available opportunities or a network through which
placements can be made, a list of job seekers, capacity to shortlist suitable candidates with
the requirements of the job in order to provide employers with a short list of options, proper
reference checks and follow up. Most importantly, if the service is to secure repeat usage, it
needs to be skilled at placing the right people in the right jobs.
The experience of those interviewed is that job brokering can play an important role in
assisting with closing the gap between supply and demand. It has the ability to change
faceless names into humans, each with their own story and skills offering. The service can
promote and market an individual and their skills, similar to the service provided at the top
end of the skills spectrum. This combined with the track record gives employers a sense of
security in placing the person. It also results in better matching and lower rejection rates.
A range of secondary functions have been developed by intermediation services over time in
order to improve the quality and efficiency of the service. These include the additional
categories of service such as training or work experience placement services and innovative
job brokering value add services. One example of a value added service is the British
transport assistance programme Work Wise.
Box 5: Work Wise
Recently, Centro-WMPTA, the West Midlands public transport developer and promoter, was
awarded one of the first places at the Guardian Public Services Awards for its highly acclaimed and
innovative transport assistance scheme to the unemployed and new entrants into the job market.
Centro-WMPTA is the largest public transport body outside London. Together with Jobcentre Plus
(Britain’s employment intermediation service), employment charities and the relevant local
government authorities, Centro-WMPTA has been rolling out the Work Wise scheme across the
West Midlands since 2003.
Work Wise is set up to address employment barriers created by lack of access to, and affordability
of, transport for the long term unemployed. The Work Wise scheme offers job seekers tailored
journey plans and public transport information, free day tickets for interviews, and travel passes
for up to three months after starting a new job. This addresses cash flow needs of workers just re-
entering the job market.
Work Wise officers, who provide the passes, also work closely with Jobcentre Plus and other
similar local organisations to offer the service to their customers.
The scheme has been responsible for helping over 4,200 people back into work, and by promoting
sustainable transport with over 90% of customers still using public transport 12 months after
finding employment. According to studies in Walsall, 69% of people who have received a pass
come from the most economically deprived areas. Research has also shown that 77% of Work Wise
users are still in their new jobs after three months.
Source: Centro-WMPTA website
In summary, job brokering works best when there is skilled capacity to assess work seekers
skills and the demands of a vacancy, when the placement agency has a broad network and is
able to open up new opportunities or streams of job and when system are in place that allow
the service to grow without losing its personalised information bank.
Job intermediation is most successful for those recently out of work, at risk of job losses, and
among recent school or college leavers. Experience shows that long term unemployment is a
complex and entrenched problem requiring a multiplicity of strategies, of which employment
intermediation is just one. This has been the experience of Men on the Side of the Road that
engages with many people that have no work, infrequent work and piece work. Work Now,
which has a more limited range of services than Men on the Side of the Road, has found that
with tight management it is possible to build up a work record, starting with one day’s work
and slowly expanding this. This type of solution is management intensive and demands lots
of face-to-face time from the agency. It also does not result in an immediate long term job.
Therefore, for the long term unemployed global experience suggests that the provision of
counselling and support, combined with some kind of social welfare assistance, are needed
in addition to job inter-mediation services. The innovations of the Jobcentre Plus, which
provides work trials and mentoring and the use of training – as has been done in Hungary –
offer useful models for future programmes.
While designed around this objective, some services in South Africa offer a similar service.
For example, labour brokers in the mining sector are used to provide short term staff, on a
trial basis. At the end of the three months contract, the mine will recruit a portion of the
team that has performed on a full time basis. This is an increasing demand, especially for
mines that want to employ more local workers, many of whom have little understanding of
the sector prior to working in it. Consequently, the drop out rate and mismatches increased.
Work experience facilitation
Globally, there has been a growing focus in employment intermediation programmes on
placements of work seekers to gain work experience, not simply placements with a view to
long term employment. This can include community service programmes, internships and
the administration of labour market programmes, including public works programmes. This
service is particularly important for first time work seekers who are not able to get into the
job market and for the long term unemployed in need of a bridge back into the employment
market.
In South Africa, learnerships have been a strong government focus in recent years. They are
intended to combine training and work place experience. Learnerships are funded through
the Sector Education and Training Authorities (SETAs), Expanded Public Works Programme
(EPWP) and Umsobomvu Youth Fund (UYF). The key challenges have been: the relatively
weak performance of the SETAs in generating and rolling out learnerships, the high drop-out
rates during the course of a learnership, the absence of guaranteed long-term employment
at the end of the learnership, and the high cost per person of the programme.
Often, employment intermediation agencies are well placed to assist in the rollout of the
learnership programmes. They, generally, have a good knowledge of the local labour market,
are aware of job seekers’ needs and can, therefore, identify people who could most benefit
from such a service, have an established network of private sector clients and are aware of
what categories of workers are in demand, have an established infrastructure and are linked
in with training providers. This places them in an ideal situation to administer work place
experience or labour market programmes, refer participants to such programmes, and make
policy inputs into the design and redesign of programmes.
In South Africa, some NGOs, such as Work Now, have stepped into this role and won the
contract to administer and manage the Coast Clean programme in Hout Bay. This has
provided them with a useful instrument to introduce people to the world of formal work. In
the case of MSR, they have not been able to tap into the expanded public works programme
(EPWP) to date but see huge advantages of linking their members to such programmes.
Work place experience requires managing work seekers’ and employers’ expectations in
order to be successful. It also demands a range of partnerships and collaborative
relationships, excellent skills in assessing candidates’ ability to take up the opportunities, and
innovative approaches to expanding the opportunities.
Work place experience is a key stepping stone for both the long term unemployed and those
who have never worked before, such as the recent school of college leavers. The lack of work
place experience makes these people less attractive to hire. Placement programmes can take
a number of forms, for example, subsidised placements (such as those provided through
Jobcentre Plus), public works programmes, community service programmes,
apprenticeships, internships or volunteer job shadowing programmes. In the case of the very
poor, short term income while gaining experience is a key incentive to people remaining on
the programme for its duration. The downside is that participants may be more interested in
the course stipend than in the actual course content.
Training
Training is an important resource that can improve the chances of someone finding a job in a
changing job market characterised by increasing demands for high skills levels. When
recruiting, agencies are in a good position to ask work seekers about their training needs.
This is included as a question in both the Department of Labour’s application forms and that
used by NGO systems such as Work Now and Men on the Side of the Road. Compiling a
database of training needs is, therefore, easily executed.
Knowledge of job vacancies and demands is needed to ensure that training is targeted to
meet actual demand. The experience of Umsobomvu, TEBA and the reviewed NGOs is that
their engagement in the market enables them to stay abreast of the changing needs of
employers. Yet, this knowledge is often not used to inform the training programmes.
In addition, despite the acknowledged link between training and employment intermediation
in many countries, there is still a lack of a practical and effective link between training and
intermediation services in most instances.
Box 6: Training provision by public sector employment services
Increasingly, employment services are linking work seekers with training but not
directly providing the training. For example:
� In Finland, training courses and the places on them are purchased by the public
employment services;
� In Austria, Germany and Norway, training needs are met by the market;
� In Sweden, the service purchases a large number of training courses designed for
specific target groups; and
� In Poland, work seekers are linked to training programmes through a networked
approach.
Source: World Bank (2003)
In many countries, the actual delivery of training programmes is not seen as a core function
of the employment intermediation services. In a review of such services, globally undertaken
by the International Labour Organisation (ILO), it is recommended that intermediation
services do not make training a key function but rather limit their role to the identification of
training needs, the recruitment of candidates for training programmes, referrals and support
for the placement of trainees in employment at the end of the training.
In South Africa, training is an essential part of the public works programmes and a core
service funded by the Department of Labour and Umsobomvu.
Experience in the NGO sector has been varied. All spoke of the advantages of formalising
links with the SETAs and Department of Labour as part of the service. In the absence of these
formal links some, like Men on the Side of the Road include training as a core part of the
strategy to address long term unemployment. This was also the motivation behind the roll
out of the Hungary training programme.
Box 7: Hungarian training programme
In Hungary the labour market has experienced a ‘downward displacement’ effect with respect to the
education level of workers. Of 100 higher education graduates 83 are in work and of 100 people with
secondary degrees 66 are in employment, of 100 people with low or no education only 28 have jobs in
Hungary. Recognising this challenge the state already had a subsidy in place to assist people with reduced
work capacities to obtain qualifications, learn languages, and acquire basic education. However, this has
not been adequate to arrest the problem. In 2006 government took a bold step and launched a massive
training programme called “Take one step ahead.” The programme was designed to provide skilled labour
matched to demand. It targets 10 thousand trainees between 2006 and 2008. Training is provided free of
charge and one month’s minimum wage is paid to trainees if they complete the programme and receive a
qualification. It was not possible to source data on the success of the programme to date.
Source: Mr Gabor Csizmár (2006)
From reviewing the global and national experience, it is clear that training is a stepping stone
to employment in many instances. Two types of training need to be provided. The first is job
related life skills. Both Men on the Side of the Road and Work Now management identified
English language, communications and conflict management skills as the critical skills areas
for work seekers to master. This invariably needs to be managed by the placement agency
and tailor designed for different groups of work seekers. The second category of training is
hard skills training in a particular skill. In general, this can be outsourced to providers with
the employment intermediation agency simply identifying the need and screening
participants for training providers. Training needs to be linked directly to market demand
and must be practical.
Training is particularly important for workers at risk of medium term job loss, those who
have never worked and who have no skills, or low skilled workers needing to upgrade their
skills in order to advance in the job market.
Advice
Provision of labour relations advice is a need among both employers and employees. In some
of the state-run services, the provision of advice around structuring new contracts,
terminating contracts, changing working conditions and training are provided and used
rather extensively. In the case of the state departments of labour, there is a dual role of
adjudicator/arbitrator and support.
Outside of the Department of Labour, a tension arises from the intermediation service
playing the roles of both broker and negotiations adviser. MSR, in its initial phase, provided a
lot of advice to members, assisted them in dealing with unfair labour practices and tried to
mediate with employers. However, over time, this service has been terminated. Outside of
referral to information on the law and regulatory requirements, the experience of most
providers has been to shy away from this service because it is perceived as compromising
their role as “facilitator”, “mediator” or “broker”. Generally, it is employers and aggrieved
workers who look for advice.
Benefit administration
Many public sector employment services are responsible for administering the
unemployment benefit scheme, including benefit determination, payment and job-search
verification and compensation funds. There are obvious advantages to linking benefit
payments to a broader service. Unemployment insurance that is effectively linked to actual
job search processes means it is used as intended – to cushion income loss temporarily while
seeking new work, retraining and then seeking new work. Jobcentre Plus has very effectively
applied this model.
Links to other benefit payments, such as to welfare payments, also offer advantages.
Effective employment intermediation can reduce the demands on the social welfare system.
However, there are some concerns. Those who prefer to keep the two separate believe that
a link gives the intermediation service too dominant a social service function. Experience
suggests it is not essential to link the two because different situations demand different
arrangements. The benefit administration service is almost never contracted out to service
providers.
Interestingly, outside of the standard state-related benefits, some employers have also
identified the need for other benefits as part of the process of attracting work seekers, and
this includes, for example, housing for agricultural or mining workers.
TEBA Limited offers an interesting example of a private sector response to the provision of
benefits. TEBA has developed an excellent migrant support system through its post
employment services, social and financial services that are all offered in addition to its
recruitment services. The post employment services include death reports, insurance
investigations for both the Compensation and Provident Funds, medically incapacitated
transport and tracing of beneficiaries who have not claimed benefits or shares. The social
services include employer/employee family communication, assistance with funerals and
home-based care. The financial services include deferred pay for foreign workers, cash
transfers and remittance management for employees, as well as withdrawal facilities linked
to TEBA Bank.
Monitoring and evaluation
Monitoring the performance of employment intermediation services across all providers is
important for a comprehensive analysis of the market and its trends. It also directs the
application of management tools and the future design of programmes.
If all the services are public sector driven or funded, a single monitoring system is possible.
In situations where NGOs run the services, and receive non-state donor funding for it, the
monitoring becomes more challenging and is dependent on the good will of the
stakeholders.
DISCUSSION
In this section, we discuss briefly some of the issues and lessons that emerged from the
international desktop review and the six case studies of South African intermediation and on
which the recommendations which follow are made.
Key issues
A number of issues were raised in the research and it was evident that there is no right way
to proceed; rather, there are advantages and disadvantages to each option. The most
important of these are highlighted below as points that require consideration. Within each
issue, there is a continuum of service, as reflected in Figure 1, that could be offered and the
challenge is to identify the correct level of service.
Figure 1: Continuum of service
There is a real tension between focusing on job intermediation and providing one-stop-shops
that meet the varied needs of work seekers. In the initial stages, focus seems to allow for
better systems and cost effectiveness while breadth enables providers to experiment with
and refine the right package of services that best meet the needs of different target groups.
However, over time, agencies tend to expand the service because of the failure of
partnership arrangements to deliver.
The link between employment intermediation and entrepreneur assistance programmes is
an interesting one. In contexts such as South Africa, where inadequate employment
opportunities exist to absorb all the unemployed, clearly employment intermediation must
include some focus on creating new opportunities. However, the skills and systems needed
to support entrepreneurs are very different to those needed to facilitate employment or
support work seekers to equip themselves for employment.
The second issue relates to the intensity of the service. Where face-to-face services exist,
these seem to offer a better capturing of work seekers’ details and skills and a better
matching of these with employers’ needs. However, it also costs more. Many of the services
are planning to reduce the face-to-face time. Work Now has cut back its interviews, TEBA is
planning to invest more in an electronic service, and the Department of Labour is investing in
an electronic system that will reduce the time demands on employment service placement
officers.
Training is an important resource that can better equip people to secure employment. As
with entrepreneurship support, training in specific hard skills requires a different skills base
and set of systems to those needed for job brokering. For this reason, employment
intermediation services often act as either a referral point for training providers or to fund
places on courses. But they do not directly provide the training themselves. However, there
are also advantages to providing training directly in that it can be used as part of the job
readiness process and can enable quality control.
The question of aftercare is another continuum. In some sectors and industries the demands
for aftercare and benefits are huge, while in others it is more limited. All the services include
in their design a follow-up of the placement. All do not do this, and that consistently
weakens the dataset. Most services do not focus on providing post employment benefits.
Yet, as the TEBA Ltd case study shows, this can really improve the offering to the worker and
increase the attractiveness of the industry.
Outside of these primary continuums, there are debates around the level of advice and the
extent to which immigrants can or cannot access the service.
On the one hand, employment intermediation agencies are well placed to provide advice on
the law and protect the rights of workers. On the other, they need to remain friendly to all
and enemy to none in order to successfully maximise job opportunities. Balancing these
oftentimes competing needs can be tricky.
Finally, determining what services can and cannot be accessed by immigrants is important.
Employment intermediation services that facilitate work opportunities for immigrants and
which ease the movement of labour created within the law can facilitate a more attractive
working environment for different kinds of businesses. At the same time, facilitation of legal
immigrant pools of labour can undermine the wages of workers.
Lessons
There are several good arguments for the provision of the range of services. Employment
intermediation provides information which assists with transparency and labour market
efficiency. Improved matching allows for lower costs and quicker placements. This has public
and private benefits. On the one hand, it reduces costs of unemployment support and, on
the other, it reduces outputs losses, reduces staff time in personnel functions. The service
can also facilitate equity in access by targeting disadvantaged work seekers and assisting
people to identify and package their skills and experience in order to link this to available
opportunities.
Each category of service has different benefits. Work placements allow people to increase
their experience and, through this, their employability. Training equips people with the right
skills for the market and increases their chances of finding work. Advice enables the
providers to understand the issues in the market and ensures compliance and protects the
interests of workers. Benefit administration, as part of an employment intermediation
service, minimises the time people need to access the benefit. Finally, monitoring and
evaluation systems enable a better understanding of the market and facilitate management
improvements.
In South Africa, the state essentially provides employment intermediation services through
the Department of Labour’s Labour Centres and related agencies. Sadly, these services have
not had the desired effect and have a poor placement record. The key weaknesses in the
existing state system are:
• Limited human resource capacity within the centres (i.e. the span of work and number of
staff servicing this);
• Limited networks between staff servicing these centres and businesses – both formal
and even more importantly informal (i.e. inadequate levels of skilled staff);
• Reliance on technology to solve the problems instead of face-to-face contacts;
• Lack of passion and commitment of many of the staff; and
• A lack of innovation.
NGOs and the private sector organisations that have stepped in to fill the gap have had
greater success for the following reasons:
• Passion, commitment and drive of staff;
• Networks with employers which enable them to identify and capitalise on new
opportunities before they reach the market;
• High level skills of those doing the recruitment, enabling them to informally provide
mentorship and coaching services;
• Innovative solutions are possible given the localised scale of most of these operations;
and
• By and large, good monitoring systems which enable management action to improve the
service.
Regardless of the provider, there are no downsides to employment intermediation. There
are, however, specific challenges that impact on the usefulness and impact of specific
services. For example, employment intermediation has limited impact in situations where
the economy and job market are contracting, unless the focus is on assisting people to
identify and create new work opportunities. Where there are large skills mismatches,
employment intermediation only works if linked to a skills development and training plan
that builds marketable skills among the unemployed. In addition, the cost effectiveness of
the service varies enormously.
Networks and people are at the centre of employment intermediation services. Networks
between agencies and the unemployed, networks with employers, networks with other
service providers and networks with other support agencies are key examples. Networks
require people and cooperation.
Good systems are critical. Successful employment intermediation requires efficient and
effective management of good datasets and follow-up and tracking mechanisms. Allocating
significant resources into information technology is often seen as the panacea for ineffective
systems. While appropriate technologies can enhance the efficacy and application of
systems, it cannot replace the need to design proper information management systems and
networks.
Targeted marketing and promotion campaigns can increase the number of work
opportunities being offered, increase the use of the service and encourage innovative
partnerships.
In addition, the best success stories in employment intermediation all include some form of
adaptation to the local context and the personalisation of services through, for example,
capturing data on employer comments that bring databases alive and encourage employer
pledges.
Where an enabling environment has been created for non-government providers, the
capacity of the intermediation sector is enhanced and the number of service providers grows
accordingly.
CONCLUDING REMARKS
Employment intermediation services are most successful in a growing economy where there
is a demand for jobs, short term unemployment, weak connections between training and
employment services, and high levels of discrimination. It is just one instrument within a
larger system of employment, training and social welfare. In South Africa, the structural
reasons for unemployment are deep and our growth rates are threatened by major
infrastructure constraints. However, employment intermediation services remain necessary
as an instrument that can facilitate proactively the linkages between job seekers and
available jobs, promote skills development and engage employers in maximising their
employment creation potential. A South African employment intermediation model needs
to be developed to engage with the reality of the economic environment and the needs of
job seekers.
Firstly, based on the experience in other countries, and that of agencies interviewed in South
Africa, a network and partnership approach makes sense for South Africa. Government has
not addressed unemployment successfully. Private agencies and NGOs have demonstrated
an ability to fill the gaps in the market efficiently and effectively. Harnessing this energy and
innovation is the key to broadening the base of the service and maximising benefits for work
seekers. This is in line with global trends where the state no longer has the monopoly on the
provision of the service in most countries. Currently, funding has been one of the biggest
constraints for non-government providers and some flow of secure funds, with a medium
term budget commitment, is needed if these services are to be up-scaled and systems
strengthened.
Secondly, the most innovative and effective services globally are those that have managed to
address all work seekers’ needs with a one-stop-shop service. This requires better
coordination between the Department of Labour, EPWP, SETAs, local municipalities and
private providers. One government official interviewed suggested that a clustered approach,
where each of the services operates under one roof in local areas, would facilitate such
cooperation. Another provider proposed a memorandum of agreement between
stakeholders. Regardless of the model, increased collaboration between government actors
and between government and non-government actors will benefit work seekers.
Thirdly, the introduction of relationship managers to work with private, non-profit providers
and assist them with improving their service, accessing government funds and programmes,
benefiting from national services, marketing the service and at the same time capturing the
data from these providers, is proposed to facilitate the collaboration. Good systems and
regular, accurate information collection and analysis are fundamental to the effective
management and monitoring of the service. It is proposed that standard indicators be
developed and all providers monitor their services using these agreed indicators. In this way,
government will be able to compare the costs of their services with those of private
providers and identify trends, inefficiencies, and areas where demand is greatest.
Fourthly, an interesting innovation adopted in Australia and England is the introduction of
subsidies/grants that provide incentives for the placement of the long term unemployed or
the placement of work seekers into permanent jobs. One of the challenges with the existing
government programmes, such as the EPWP, is the short term nature of the work and the
failure to migrate this into longer term opportunities. Men on the Side of the Road has also
identified long term placements for its members as a real challenge, noting that it costs a lot
more because, generally, some training intervention is also required.
Fifthly, in addition to the cooperation around delivery, joint training of staff, regular reviews
and consultations with a view to improving the service and initiation of joint projects all help
to improve the quality of the service.
Finally, exchanges and partnerships between providers in South Africa and between South
African and international agents is a useful mechanisms for sharing lessons, training and
generating ideas.
Next Steps
Based on the findings of this review, it is clear that South Africa’s second economy strategy
will benefit from the addition of more diverse forms of employment intermediation services.
The next step is to design interventions based on the lessons learnt from the review and the
case studies. These are detailed in a separate document in Part Three.
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www.uel.ac.uk/news/latest_news/stories/learning.htm
ANNEXURE 1: INTERVIEWS
Interviewee’s
names Interviewee’s position / role
Department of
Labour
Mr Thobile Lamati Provincial Executive Manager, Department of Labour, Western Cape
Mr Marten Leukes Manager: Employment and Skills Development Services, Department
of Labour, Western Cape
Mr Mervyn Silber Managing Director, Industries Education and Training Institute
Mr Len Penfold Marketing and Operations, Industries Education and Training Institute
Ms Venessa Cupido Manager: Labour Market Information Statistics and Planning,
Department of Labour, Western Cape
Ms Laurita de Jesus Assistant Manager, Administration: Employment Services,
Department of Labour, Western Cape
Ms Priscilla Davids Regional Manager. Services SETA
Mr Ngubo Lubuwana Cape Town Labour Centre Regional Manager
EPWP
Mr Gribble s Western Cape Dept of Transport and Public Work
Ms S Laattoe Western Cape Dept of Transport and Public Works
Two service providers
who requested not to
be named
Ekurhuleni JPP
Ms Phindile Mnisi Benoni Local Labour Centre
A representative from
Vericon
TEBA
Kevin Cotterell Head of Mine Services, TEBA Head Office
Anneri Pieterse Chief Communications Officer, TEBA Head Office
Tando Nthlapo TEBA Head Office
Ernest Mntungwa Regional Coordinator Eastern Cape
Jeanne van
Staalduinen and
Ettienne Cloete
Phokeng Office North West
Interviewee’s
names Interviewee’s position / role
Bushy Going Carltonville Office North West
Hennie Mulder Human Resources Supervisor, Goldfields
Anton Barnard Anton Barnard Labour Services
Steven Bosch HR Manager AngloGold Ashanti
Labour brokers
Various labour
brokers who all spoke
on condition of
anonymity
Men on the Side of
the Road
Peter Kratz Director
Mrs Hawson Employer
Mr Welgemoed Employer
Mr Vuyisile Mofu Field worker
Mr Anthony Marshall-
Smith
Board chair
Sipfele Sontundu Employed member
Xolani Mnyakana New member
George Mosebetsi Self employed member
Zakelele Mogumbe New member
Work Now
Eunice Sutaste Work seeker
Erin Boonzaaier Work seeker
Thandokazi Dumoyi Work seeker
Berenice Lucas Department of Social Development
Ronald Bownes Work Now
Tania Bownes Work Now
Interviewee’s
names Interviewee’s position / role
Jeremy Rich Work Now
Michelle Ndatyulwa Work seeker
Lyndiwe Ndatyulwa Work seeker
Timothy Kamanya Work seeker
Trevor Loyilani Work seeker
Lydia Hassett Engel and Volker, employer
Chanique Viljoen Steers, employer
OVERVIEW OF RESEARCH
The review of second economy programmes: An overview for the Presidency’s fifteen
year review – Kate Philip and E Hassen
Addressing inequality and economic marginalisation: A strategic framework – Kate Philip
Inequality and economic marginalisation
Inequality, unemployment and poverty in South Africa – Fiona Tregenna and Mfanafuthi
Tsela
Income and non-income inequality in post-apartheid South Africa: What are the drivers
and possible policy interventions? – Haroon Bhorat, Carlene van der Westhuizen and
Toughedah Jacobs (DPRU)
How the structure of the economy impacts on opportunities on the margins – Kate Philip
Asset inequality – Ebrahim-Khalil Hassen
Economic development strategies
Energy-based poverty indicators: Meeting AsgiSA targets – Claire Vermaak, Marcel Kohler
and Bruce Rhodes
The fisheries sector – Expanding economic opportunities through regulatory change –
Feike
Potential for a South African aquaculture industry on the Northern Cape’s Namaqualand
Coast – Feike
Labour markets
Employment intermediation for unskilled and low-skilled work seekers Part 1: Overview –
NB Ideas, with Strategies for Change and Indego Consulting
Employment intermediation for unskilled and low-skilled work seekers Part 11: Case
studies – NB Ideas with Strategies for Change and Indego Consulting
Local labour placement project: Overstrand Municipality – Overstrand Municipality
Understanding inequality: Promoting equity – Paul Benjamin and Nicole Yazbek
Identifying appropriate interventions to support the transition from schooling to the
workplace – Miriam Altman (HSRC) and Carmel Marock (Singizi Consulting)
Small enterprise development and the informal sector
Missing the target: Business support to the second economy – Lochner Marais
Hands-on Fish Farmers Cooperative Ltd: A case study – Jacqui Boulle
Business health check: Western Cape Bus Operators’ Transport Cooperative Ltd
(Siyakhula) – Karen Harrison
Clothing traders in Gauteng: Motivations, barriers and macroeconomic linkages – CSID
Linking small and marginalised producers to external markets: New ideas for demand-side
measures using value chain analysis – Sandy Lowitt
Linking small marginalised producers to modern markets: Are we trying to fit a square
peg in a round hole? – Sandy Lowitt
Mediating from the margins: The role of intermediaries in facilitating participation in
formal markets by poor producers and users – Marlese von Broembsen
TIPS RESEARCH REPORT
4.1 2011
Rural sector
Making markets work for people and the environment: Employment creation from
payment for eco-systems services – James Blignaut, Christo Marais, Mathieu Rouget,
Myles Mander, Jane Turpie, Thami Klassen and Guy Preston
Strategies to support South African smallholders as a contribution to government’s
second economy strategy Volume 1: Situation analysis, fieldwork findings, and main
conclusions – PLAAS
Strategies to support South African smallholders as a contribution to government’s
second economy strategy Volume 2: Case studies – PLAAS
Review of the Eastern Cape’s Siyakhula/Massive maize project – Norma Tregurtha
Urban development
Creating access to economic opportunities in small and medium-sized towns – Doreen
Atkinson (for Urban LandMark)
The state of land use management in South Africa – Sarah Charlton (for Urban LandMark)
Emergency relief in informal settlements: Proposals for action – Mark Misselhorn and
Tanya Zack (for Urban LandMark)
Transport and the urban poor – Mathetha Mokonyama (for Urban LandMark)
Strengthening the impacts of economic development strategies on urban poverty – Glen
Robbins (for Urban LandMark)
Access to services for poor people in urban areas – CSIR (for Urban LandMark)
Development of the urban development component for a second economy strategy:
Overview analysis – Urban LandMark
How tenure security can increase access to economic opportunities for poor people –
Lauren Royston (for Urban LandMark)
Challenges of inclusive cities: Making urban spaces and places for all – Nisa Mammon,
Kathryn Ewing and Jody Patterson (for Urban Landmark)
Governance and governability: What are the challenges for an inclusive city – Monty
Narsoo (for Urban Landmark)
THIS RESEARCH IS AVAILABLE ON THE TIPS WEBSITE
www.tips.org.za
